The British Retail Consortium has been campaigning about the injustice of card fees, particularly credit card charges, see figure below.
BRC estimates of average cost to handle a transaction based as a % of total sales turnover for the payment methods
Source & Copyright©2014 - British Retail Consortium (Further details on BRC study see.)
This campaign is starting to bear fruit. MasterCard has just paid out $61 million to UK supermarket retailer Tesco in what is expected to be the first of several settlements by card schemes over interchange fee lawsuits lodged by UK retailers. MasterCard chief financial officer Martina Hund-Mejean announced the settlement during the company’s earnings call, saying: “We have been settling with Tesco, which is the largest merchant claimant in this litigation. We are pleased that that is behind us.”
Tesco was one of 20 UK retailers which filed suit against MasterCard in 2013 alleging historic overpayment of “anti-competitive” interchange fees. Asda, William Morrison Supermarkets, Arcadia Group, Comet, Iceland and at least six other UK chains have also commenced legal proceedings against Visa over payment processing fees.
European Union and UK objections
Earlier in July, EU anti-trust regulators issued a formal statement of objections against MasterCard, accusing the card scheme of using its rules to artificially inflate fees and of over-charging retailers for purchases made by non-EU cardholders. The UK Government has also commenced consultation on interchange fee caps which are set to come into force across the EU at the end of the year.
CTMfile take: The problem with payment charges is that interchange may be reduced, but other new charges can be added. Continuous vigilence on bank charges is required, see.
Like this item? Get our Weekly Update newsletter. Subscribe today